Tale Of The Tape Pricing Changes At Winn-dixie Have Yet To Register Strong Customer Reaction.

July 29, 1990|By LESLIE A. WILLIAMS, Business Writer

It`s too soon to tell whether Winn-Dixie`s new ``everyday low price`` strategy is luring new customers, but the supermarket chain is attracting the interest of investors.

The company`s stock increased 10.6 percent, from 67 1/4 on June 28 -- the day Winn-Dixie announced the reduced price strategy -- to 74 3/8 on Friday. In contrast, Albertsons, another supermarket chain with the same pricing strategy, dropped 4.5 percent, from 36 1/2 on June 28 to 34 7/8 on Friday. Standard & Poor`s 500 stock dropped slightly from 357.63 on June 28 to 353.44 on Friday.

Analysts who cover Winn-Dixie say the stock rise is a reflection of investors` confidence in the retail food industry.

``I don`t think the runup in stock is solely attributable to everyday low prices. I think that`s kind of a stretch, `` said Mark Allen, an analyst with Robinson Humphrey in Atlanta. ``Investors are looking for stocks that are going to deliver earnings growth. The cliche is people have to eat.``

Allen said the sales at Winn-Dixie were about $9.7 billion for the fiscal year that ended on June 27, up about 6 percent from sales for the previous fiscal year.

Winn-Dixie, which has stores throughout the Southeastern United States, had been experimenting with the ``everyday low pricing`` at some of its stores, and decided to expand it to all its stores. Analysts said the strategy -- adopted by other major retailers recently -- is designed to build customer loyalty and attract customers from other major supermarket chains, such as Publix Super Markets and Albertsons.

``Florida is a competitive state,`` said Kimberly Walin, an analyst at Shearson Lehman Hutton. ``To ensure their market share position, they`re being a bit more aggressive. They go head-to-head with Publix.``

A spot check last week at a store from each chain showed that of 18 basic food products and household goods prices generally were lower at Winn-Dixie than at Publix or Albertsons. Overall, Winn-Dixie had cheaper prices on 13 of the items, and the Winn-Dixie total was $3.45 less than the Albertsons total and $2.24 less than the Publix total.

The non-scientific sampling included sale items at all three store.

Allen and Walin agreed it is too early to tell whether Winn-Dixie is getting new customers as a result of their low-price program.

``I`d give it six months,`` Allen said.

Despite airing new television commercials advertising the low prices, Winn- Dixie spokesman Mickey Clerc said the chain will rely heavily on word of mouth advertising.

``Our objective is to do less (advertising) once we feel everyone knows what our prices are,`` Clerc said. ``When you lower your everyday prices, you anticipate through word of mouth and over a period of time, people will know about it.``

Clerc decline to divulge customer counts since the new sales strategy began.

It will take more than competitive prices to keep attracting customers to the supermarkets, said John Pearman, the president of the Retail Grocers Association. That`s because consumers pick their supermarket for many reasons -- location, product selection, reputation. Prices are just one of the elements.

``First of all, the names Winn-Dixie, Publix, or Albertsons don`t necessarily make the store successful,`` Pearman said. ``Location is important, and you have to have a quality product. You have to have customer service. It ranges from the pleasant people who take the bottles that you return, to the department managers. If you don`t get treated properly, regardless of the prices, you`re not going to go back.``

When it comes to consumer concerns, Martin Sloane, executive director of the National Alliance of Supermarket Shoppers, said, ``It`s not any news that item pricing is at the top of the list.``

This not only includes having lower prices, but displaying the prices clearly so that the consumer knows exactly how much a product costs, Sloane said.

Sloane said consumers yearn for cleanliness in the store and friendliness from the employees. Customers also want the register to be positioned so they can see it.

A Publix representative said the competition with Winn-Dixie keeps everyone in the industry on their toes. Publix and Albertsons also are advertising on television this summer.

``The supermarket industry is so competitive,`` said Jennifer Bush, assistant director of public relations at Publix. ``I think that`s good.``

Winn-Dixie, based in Jacksonville, has stores throughout the Southeast, including 91 in Broward and Palm Beach counties. Publix, a private company based in Lakeland has stores only in Florida, and has 89 stores in Broward and Palm Beach counties. Albertsons, based in Boise, Idaho, has stores primarily in the western United States and Southeast, including 13 stores in Broward and Palm Beach counties.

Because it is bigger, Winn-Dixie had higher sales totals in fiscal 1989. Retail sales for Publix in fiscal 1989 were $5.2 billion; for Albertsons, $7.4 billion.